London: Steel behemoth ArcelorMittal on Wednesday reported a $1.1 billion loss in the first quarter ended March 2009, primarily on account of "exceptional charges related to writedowns of inventories" amidst a slump in demand for the commodity on account of global industrial downturn.
The company had net income of $2.4 billion for the three months ended March 31, 2008.
"The loss in the first quarter of 2009 resulted from exceptional charges amounting to $1.2 billion primarily related to writedowns of inventory," the world's largest steel maker said in a statement.
ArcelorMittal saw its sales went down by 31.6 per cent to $15.1 billion in the reporting period as against $22.1 billion in the same period last year.
"The main reason for the decline continues to be the extreme weakness in demand for steel products in the first quarter of 2009 as a result of the global economic crisis, along with a steep fall in prices, leading to drastic curtailment of production," the company said.
To tide over the prevailing crisis, the company had resorted to production cuts of up to 45 per cent and other cost-cutting measures like "Management Gains" programmes for which the target has been revised to $ 2 billion in 2009 from previous $ 1.2 billion.
"Strong measures have been taken to reduce our cost considerably and liquidity remains healthy with an extended debt maturity profile. Although market conditions remain challenging, a technical recovery is inevitable and ArcelorMittal will benefit from this," ArcelorMittal Chairman and CEO L N Mittal said.
Industrial optimisation measures implemented resulted in more than $6 billion of annualised temporary fixed cost reductions in Q1 2009, and is expected to increase to more than $7.5 billion on an annualised basis in Q2 of 2009, the company said.
Amidst the prevailing slowdown and liquidity crunch, the company said it has cash and cash equivalents of $4 billion as of March 31, 2009. It added that its net debt for the reporting period stood at $26.7 billion.
The company had liquidity of $11.6 billion as of March 31, 2009 as compared with $13.4 billion by December 31, 2008).
Moreover, ArcelorMittal on Wednesday announced the termination of the share buyback programmes authorised by the shareholders on May 13, 2008, under which shares were repurchased until September 5, 2008.
On account of the production cuts undertaken to match the falling demand, the company said its total steel shipments for the reporting period fell by about 45 per cent to 16 million tonnes as compared to 29.2 million tonnes in the year-ago period.
"The sharp decrease year-on-year (shipments) resulted from reduced steel production in response to falling demand amid the global economic crisis," the company said.
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